Flashcards in IT OPERATIONS - Transaction Processing Deck (5):
4 steps in manual processing:
1) enter transaction on source document
2) record source document in journal
3) copy to ledger (master file)
The general ledger -- Classifies transactions by financial statement accounts (cash, inventory, accounts payable, sales revenue, supplies expense, etc.).
The subsidiary ledgers (sub-ledgers) -- Classify transactions by alternative accounts (e.g. customer accounts, vendor accounts, product accounts). Not all transactions are posted to sub-ledgers: each sub-ledger corresponds to a single general ledger account, and only transactions that affect that account are posted in the sub-ledger. Examples of sub-ledgers include the following:
A/R sub-ledger -- Classifies A/R transactions (credit sales and customer payments) by customer.
A/P sub-ledger -- Classified A/P transactions (credit purchases and payments to vendors) by vendor.
Inventory sub-ledger -- Classifies Inventory transactions (product purchases and product sales) by product.
4) prepare reports
From general ledger - trial balance and FS
From subisidary ledger - customer A/R balances, vendor A/P balances, etc
Group of transactions (batch) - sort into item number sequence (BATCH IS SEQUENTIAL; must be sorted because batch can be processed quickly)
Example:update inventory records
1st source into inventory master file order
2nd update inventory master file (which is also sorted like source)
TRANSACTION AND MASTER FILES MUST BE SORTED ON A COMMON KEY - SQUENTIAL ACCESS FILES
When? - used when sequential process, low volume periodic reports, transactions are independent or unimportant (fixed asset updates, depreciation postings)
Why not use batch? Not real time, always out of date, delays error detection
Step 1: Data entry: The transactions data is manually keyed (usually) and recorded in a transactions file.
Step 2: Preliminary edits: The transaction file data is run through an edit program that checks the data for completeness and accuracy; invalid transactions are corrected and re-entered.
Step 3: Sorting: The edited transaction file records are sorted into the same order as the master file.
Step 4: Master file update: The individual debits and credits are used to update the related account balance in the general ledger master file and, if appropriate, in the subsidiary ledger master file.
Continous immediate transaction processing.
Near simultaneous transaction entry and master files updating
Why? Most current acounting systems, need real-time data, want better customer service, interdependent data, high transaction volume
Why not? Cost
POS point of sales
Scanners capture data from bar codes
Computer system connected or integrated with electronic cash register
Pos networked to a central computer that maintains database of products available